Consumers don’t always realize how expensive it can be to maintain a simple checking account. Learn about the most common banking fees and get tips to avoid them below.
Your bank makes a fortune off your money. They don’t just keep it in a vault and let it get dusty. They invest your cash when you’re not using it, and unless your money is in a high-yield savings account, chances are you won’t see a cent of what they make off you. What makes it worse is some banks also charge you for holding onto your money. Why do banks charge fees? The reason they exist is that people keep paying them. It isn’t fair when you consider that they are making money off your money, but the hard truth is that bank fees are very common.
Banks are businesses, and as such they look for any opportunity to make money. Let’s look at three examples of bank fees:
While not always considered a bank fee, ATM surcharges are when a customer uses an ATM not associated with their bank and have to pay a fee to their bank, as well as a fee to whoever is running the ATM.
Fortunately, we have tips to avoid fees at Bank of America and other major companies known for making these charges.
How much are bank fees? It depends on the charge, but one thing is certain – it’s best to avoid them whenever you can. Here are some easy tricks for sidestepping bank charges:
Nobody ever said you had to keep your money in a traditional bank. There are other places that will accept your direct deposits, like online savings accounts. They aren’t always as easy to draw from, but these kinds of accounts usually offer higher yields, meaning you end up with more money in the long run.
Another tactic that helps you avoid bank service fees while also making extra cash is using a cashback credit card. Here are the steps you need to follow:
This is a trick that lots of people use to cash in on credit card rewards without having to pay interest. You may get some funny looks at the gas station when you buy that 80-cent soda with a credit card, but you can rest assured knowing that you’re earning cashback on every swipe. Plus, you’ll be avoiding those bank service fees.
According to the FDIC, banks collected over $11 billion in overdraft fees in 2017. One tactic that banks use to get as much out of this penalty as possible is to process debit transactions starting with the highest charges first.
Here’s how this abusive tactic works:
The consumer would have been much better off if the bank had processed the smaller charges initially. In that case, they would have only had to pay the overdraft penalty one time, saving them $120 and putting them in a better position to pay back what they owe.
Even after you’re fed up with your bank and leave, they may charge you one last time on your way out in the form of an account closing fee. This usually only happens if you’ve had the account for a short period. Some experts suggest waiting six months before closing a bad account to avoid this fee, but you should do some math before you follow that advice and figure out which way will save you more in the long run. You may save money by paying the account closing fee and avoiding the cost of keeping the account for six months.
We’re not saying that credit unions never charge fees. They do. But a lot of the time the benefits outweigh the disadvantages when working with a credit union. The benefits can include having an easier time getting a loan, receiving a higher yield on your savings account, and being treated more like a human rather than one of the company’s millions of customers.
You may have a harder time finding an ATM in your network, but that’s a small price to pay to avoid the rest of the charges outlined in this article. If you do decide to stick with your bank, we hope these tips will help you avoid some of the service fees you may be paying for right now.